(Former name, former address and former fiscal year, if changed, since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ý

(1) Foreign currency translation adjustments include tax benefits of $59,607and $179,948 for the three and nine months ended September 30, 2017, respectively, and tax benefits of $12,867 and $47,023 for the three and nine months ended September 30, 2016, respectively, associated with net investment hedges (See Note 10). The remaining balance in foreign currency translation adjustments excludes income taxes as a result of the Company's intention to indefinitely reinvest the earnings of its international subsidiaries outside of the United States (See Note 9).

(2) Net of tax charges of $8,618 and $24,549 for the three and nine months ended September 30, 2017, respectively, and net of tax charges of $1,900 and $36,824 for the three and nine months ended September 30, 2016, respectively. Net unrealized gain (loss) on marketable securities includes net unrealized losses of $57,728 and net unrealized gains of $427,349 for the three and nine months ended September 30, 2017, respectively, compared to net unrealized gains of $167,673 and net unrealized losses of $74,885 for the three and nine months ended September 30, 2016, respectively, related to the Company's investments in Ctrip.com International Ltd. ("Ctrip"), which are exempt from tax in the Netherlands.

Management of The Priceline Group Inc. (the "Company") is responsible for the Unaudited Consolidated Financial Statements included in this document. The Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared the Unaudited Consolidated Financial Statements following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by GAAP for annual financial statements. These statements should be read in combination with the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.

The Unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including its primary brands of Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com and OpenTable. All inter-company accounts and transactions have been eliminated in consolidation. The functional currency of the Company's foreign subsidiaries is generally the respective local currency. Assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at the average exchange rates for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive income (loss)" in the accompanying Unaudited Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Foreign currency transactions and other" in the Unaudited Consolidated Statements of Operations.

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for any subsequent quarter or the full year.

Reclassifications: Due to the adoption of new accounting updates in the fourth quarter of 2016 related to the presentation of restricted cash and the first quarter of 2017 related to stock-based compensation, certain amounts in the Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 have been reclassified to conform to the current year presentation.

Restricted Cash: The following table reconciles cash, cash equivalents and restricted cash reported in the Unaudited Consolidated Balance Sheets to the total amount shown in the Unaudited Consolidated Statements of Cash Flows:

September 30, 2017

December 31, 2016

As included in the Unaudited Consolidated Balance Sheets:

Cash and cash equivalents

$

2,846,300

$

2,081,075

Restricted cash included in prepaid expenses and other current assets

1,571

932

Total cash, cash equivalents and restricted cash as shown in the Unaudited Consolidated

Statements of Cash Flows

$

2,847,871

$

2,082,007

Recent Accounting Pronouncements Adopted

Second Quarter of 2017

Scope of Modification Accounting related to Share-based Compensation

In May 2017, the Financial Accounting Standards Board ("FASB") issued a new accounting update to amend the scope of modification accounting for share-based compensation arrangements. Under this update, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. For public business entities, this new accounting update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. This update will be applied prospectively to awards modified on or after the effective date or the adoption date, if the update is early adopted. The Company adopted the accounting update in the second quarter of 2017 and it did not have an impact to the Unaudited Consolidated Financial Statements.

8

First Quarter of 2017

Definition of a Business

In January 2017, the FASB issued a new accounting update to clarify the definition of a business and provide additional guidance to assist entities with evaluating whether transactions should be accounted for as asset acquisitions (or disposals) or business combinations (or disposals of a business). Under this update, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this criterion is met, the transaction should be accounted for as an asset acquisition as opposed to a business combination. This distinction is important because the accounting for an asset acquisition may differ significantly from the accounting for a business combination. This update eliminates the requirement to evaluate whether a market participant could replace missing elements (e.g., inputs or processes), narrows the definition of outputs and requires that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.

For public business entities, this update is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods, and is required to be applied prospectively. The Company early adopted this update in the first quarter of 2017 and the adoption did not have an impact to the Unaudited Consolidated Financial Statements.

Intra-entity Transfers of Assets Other Than Inventory

In October 2016, the FASB issued new accounting guidance on income tax accounting associated with intra-entity transfers of assets other than inventory. This accounting update, which is part of the FASB's simplification initiative, is intended to reduce diversity in practice and the complexity of tax accounting, particularly for those transfers involving intellectual property. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.

For public business entities, this update is effective for annual reporting periods beginning after December 15, 2017. Entities are required to apply this accounting update on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company early adopted this update in the first quarter of 2017. The adoption resulted in a cumulative net charge to retained earnings of $4.2 million, a reduction in deferred tax liabilities of $5.7 million and reductions in current and long-term assets of $3.3 million and $6.6 million, respectively, as of January 1, 2017.

Share-based Compensation

In March 2016, the FASB issued new accounting guidance to improve the accounting for certain aspects of share-based payment transactions as part of its simplification initiative. The key provisions of this accounting update are: (1) recognizing current excess tax benefits in the income statement in the period the benefits are deducted on the income tax return as opposed to an adjustment to additional paid-in capital in the period the benefits are realized by reducing a current income tax liability, (2) allowing an entity-wide election to account for forfeitures related to service conditions as they occur instead of estimating the total number of awards that will be forfeited because the requisite service period will not be rendered, (3) allowing the net settlement of an equity award for employee statutory tax withholding purposes to not exceed the maximum statutory tax rate by relevant tax jurisdiction instead of withholding taxes for each employee based on a minimum statutory withholding tax rate, and (4) requiring the presentation of excess tax benefits as operating cash flows and cash payments for employee statutory tax withholding related to vested stock awards as financing cash flows in the statements of cash flows. Under this new accounting standard, all previously unrecognized equity deductions are recognized as a deferred tax asset, net of any valuation allowance, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption of this standard.

The Company adopted this accounting update in the first quarter of 2017 and recorded a deferred tax asset of $301.4 million related to previously unrecognized U.S. equity tax deductions, with an offsetting cumulative-effect adjustment to retained earnings as of January 1, 2017. The Company elected to account for forfeitures related to service conditions as they occur; as a result, there was a cumulative net charge to retained earnings of $6.9 million and the recognition of a deferred tax asset of $2.1 million, with an offsetting credit to additional paid-in capital of $9.0 million. In addition, the Company elected to change the presentation of excess tax benefits in the Unaudited Consolidated Statement of Cash Flows for periods prior to January 1, 2017 to reflect these excess tax benefits in operating cash flows instead of financing cash flows, resulting in a

9

reclassification of $72.1 million for the nine months ended September 30, 2016. "Payments for repurchase of common stock" in the Unaudited Consolidated Statements of Cash Flows includes withholding taxes paid on vested stock awards (see Note 8).

Other Recent Accounting Pronouncements

Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB issued a new accounting update to simplify hedge accounting. This accounting update eliminates the requirement to separately measure and report hedge ineffectiveness and requires the entire change in the fair value of the hedging instrument to be recorded in the currency translation adjustment section of other comprehensive income (loss) for net investment hedges. This accounting update allows entities to perform the initial prospective quantitative assessment of hedging effectiveness at any time after the hedge designation rather than at hedge inception as currently required, but no later than the first quarterly effectiveness test date. In addition, this update allows entities to elect to perform subsequent effectiveness assessments qualitatively instead of quantitatively if they expect the hedge to be highly effective at inception and in subsequent periods.

For public business entities, this update is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods. Early adoption is permitted. A modified retrospective approach will be applied to net investment hedges that exist on the date of adoption with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The Company does not expect the adoption of this update to have any impact to its consolidated financial statements.

Premium Amortization on Purchased Callable Debt Securities

In March 2017, the FASB issued a new accounting update to shorten the premium amortization period of purchased callable debt securities with non-contingent call features that are callable at fixed prices and on preset dates from their contractual maturity to the earliest call date. For public business entities, this new accounting update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. Entities are required to apply this accounting update on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact to its consolidated financial statements of adopting this new update.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued a new accounting update to simplify the test for goodwill impairment by eliminating Step 2, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill, which requires a hypothetical purchase price allocation, with the carrying amount of that reporting unit’s goodwill. Under this update, an entity would perform its quantitative annual, or interim, goodwill impairment test using the current Step 1 test and recognize an impairment charge for the excess of the carrying value of a reporting unit over its fair value.

For public business entities, this update is effective for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests occurring after January 1, 2017. The accounting update will be applied prospectively. The Company has not early adopted this update. In the third quarter of 2017, the Company performed its annual quantitative goodwill impairment test (see Note 6).

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued new accounting guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable and available-for-sale debt securities. For financial assets measured at amortized cost, this new guidance requires an entity to (1) estimate its lifetime expected credit losses upon recognition of the financial assets and establish an allowance to present the net amount expected to be collected, (2) recognize this allowance and changes in the allowance during subsequent periods through net income and (3) consider relevant information about past events, current conditions and reasonable and supportable forecasts in assessing the lifetime expected credit losses. For available-for-sale debt securities, this new guidance made several targeted amendments to the existing other-than-temporary impairment model, including (1) requiring disclosure of the allowance for credit losses, (2) allowing reversals of the previously recognized credit losses until the entity has the intent to sell, is more-likely-than-not required to sell the securities or the maturity of the securities, (3) limiting impairment to the difference between the amortized cost basis and fair value and (4) not allowing entities to consider the length of time that fair value has been less than amortized cost as a factor in evaluating whether a credit loss exists.

10

This update is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities are required to apply this accounting update on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact to its consolidated financial statements of adopting this new guidance.

Leases

In February 2016, the FASB issued a new accounting standard intended to improve the financial reporting of lease transactions. The new accounting standard requires lessees to recognize an asset and a liability on the balance sheet for the right and obligation created by entering into a lease transaction for all leases with the exception of short-term leases. The new standard retains the dual-model concept by requiring entities to determine if a lease is an operating or financing lease and the current "bright line" percentages could be used as guidance in applying the new standard. The lessor accounting model remains largely unchanged. The new standard significantly expands qualitative and quantitative disclosures for lessees.

The update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is allowed. Entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact to its consolidated financial statements of adopting this new standard.

Recognition and Measurement of Financial Instruments

In January 2016, the FASB issued a new accounting update which amends the guidance on the recognition and measurement of financial instruments. The update (1) requires an entity to measure equity investments (except those accounted for under the equity method or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income rather than accumulated other comprehensive income (loss), (2) allows an entity to elect to measure those equity investments that do not have a readily determinable fair value at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, (3) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, and (4) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s evaluation of their other deferred tax assets.

This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption, although allowed in certain circumstances, is not applicable to the Company. An entity would apply this update by a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. After the adoption of this new accounting update, in the first quarter of 2018, the Company will record in net income fair value changes in its investments in Ctrip equity securities, which could vary significantly quarter to quarter (see Note 4 for the carrying values and fair values of these equity investments). In addition, the Company intends to continue to use the cost method of accounting for equity investments without a readily determinable fair value.

Revenue from Contracts with Customers

In May 2014, the FASB issued a new accounting standard on the recognition of revenue from contracts with customers that was designed to create greater comparability for financial statement users across industries and jurisdictions. The core principle of this standard is that an "entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services." The new standard also requires enhanced disclosures on the nature, amount, timing and uncertainty of revenue from contracts with customers. Since May 2014, the FASB has issued several amendments to this standard, including additional guidance, and deferred the effective date for public business entities to annual and interim periods beginning after December 15, 2017.

The Company will adopt this new standard in the first quarter of 2018 and apply the modified retrospective transition approach, which means that the financial statements and footnotes will be presented on a historical basis for 2016 and 2017, while 2018 will be reported under the new standard. In addition, 2018 financial information will be disclosed in a separate footnote to the financial statements on a basis consistent with the Company's current accounting. Under the new revenue standard, the timing of revenue recognition for travel reservation services will change. For example, revenue for accommodation reservation services, which is primarily recognized at guest check-out under the current accounting guidance,

11

will change to be recognized at guest check-in under the new standard. The Company currently expects this timing change to slightly increase its annual revenues and net income, although the effects on quarterly revenues and net income are expected to be more significant. For example, a meaningful amount of travel typically starts in December each year and is completed in January of the following year. Under the new revenue standard, this revenue will be recognized in the fourth quarter each year rather than the first quarter of the following year. In addition, revenue from Name Your Own Price® ("NYOP") transactions is currently presented in the statement of operations on a gross basis with the amount remitted to the travel service provider reported as cost of revenue. Under the new standard, NYOP revenue will be presented on a net basis in merchant revenues because the Company does not control the underlying service provided by the travel service provider prior to its transfer to the consumer. Therefore, NYOP cost of revenue will be presented net within revenues for periods after adoption of the new revenue standard and the Company will no longer present cost of revenues or gross profit in its consolidated statements of operations.

Upon adoption of the new standard, billing and cash collections are expected to remain unchanged and, therefore, net cash provided by operating activities as presented in the consolidated statement of cash flows will not be impacted.

During the third quarter ended September 30, 2017, the Company has substantially completed its testing of the modified and/or newly implemented internal controls over the new processes required in accordance with the changes under the new revenue recognition guidance. The Company expects to finalize its expanded disclosures as required by the new revenue recognition standard and quantify the retained earnings impact upon adoption at January 1, 2018 during the fourth quarter of 2017.

2.STOCK-BASED EMPLOYEE COMPENSATION

Stock-based compensation expense included in personnel expenses in the Unaudited Consolidated Statements of Operations was approximately $66.4 million and $54.1 million for the three months ended September 30, 2017 and 2016, respectively, and $192.2 million and $175.1 million for the nine months ended September 30, 2017 and 2016, respectively.

Stock-based compensation expense is recognized in the financial statements based upon fair value. Fair value is recognized as expense on a straight-line basis over the employee's requisite service period. The fair value of performance share units and restricted stock units is determined based on the number of units granted and the quoted price of the Company's common stock as of the grant date. Stock-based compensation expense related to performance share units reflects the estimated probable outcome at the end of the performance period. The fair value of employee stock options assumed in acquisitions was determined using the Black-Scholes model and the market value of the Company's common stock at the respective acquisition dates.

Restricted Stock Units and Performance Share Units

The following table summarizes the activity of restricted stock units and performance share units ("share-based awards") during the nine months ended September 30, 2017:

Share-Based Awards

Shares

Weighted-Average Grant Date Fair Value

Unvested at December 31, 2016

515,606

$

1,287.88

Granted

166,957

$

1,742.75

Vested

(136,344

)

$

1,314.49

Performance Share Units Adjustment

6,702

$

1,274.19

Forfeited

(32,081

)

$

1,402.11

Unvested at September 30, 2017

520,840

$

1,420.00

As of September 30, 2017, there was $395.2 million of total future compensation cost related to unvested share-based awards to be recognized over a weighted-average period of 1.9 years.

During the nine months ended September 30, 2017, the Company made broad-based grants of 93,064 restricted stock units that generally vest after three years, subject to certain exceptions for terminations other than for "cause," for "good reason" or on account of death or disability. These share-based awards had a total grant date fair value of $162.8 million based on a weighted-average grant date fair value per share of $1,748.82.

12

In addition, during the nine months ended September 30, 2017, the Company granted 73,893 performance share units to executives and certain other employees. The performance share units had a total grant date fair value of $128.2 million based upon a weighted-average grant date fair value per share of $1,735.10. The performance share units are payable in shares of the Company's common stock upon vesting. Subject to certain exceptions for terminations other than for "cause," for "good reason" or on account of death or disability, recipients of these performance share units generally must continue their service through the requisite service period in order to receive any shares. Stock-based compensation related to performance share units reflects the estimated probable outcome at the end of the performance period. The actual number of shares to be issued on the vesting date will be determined upon completion of the performance period, which ends December 31, 2019, assuming there is no accelerated vesting for, among other things, a termination of employment under certain circumstances. As of September 30, 2017, the estimated number of probable shares to be issued is a total of 70,718 shares, net of performance share units forfeited and vested since the grant date. If the maximum performance thresholds are met at the end of the performance period, a maximum number of 141,436 total shares could be issued. If the minimum performance thresholds are not met, 57,461 shares would be issued at the end of the performance period.

2016 Performance Share Units

During the year ended December 31, 2016, the Company granted 85,735 performance share units with a grant date fair value of $111.7 million, based on a weighted-average grant date fair value per share of $1,302.25. The actual number of shares to be issued will be determined upon completion of the performance period which generally ends December 31, 2018.

At September 30, 2017, there were 71,464 unvested 2016 performance share units outstanding, net of performance share units that were forfeited or vested since the grant date. As of September 30, 2017, the number of shares estimated to be issued pursuant to these performance share units at the end of the performance period is a total of 115,576 shares. If the maximum thresholds are met at the end of the performance period, a maximum of 161,006 total shares could be issued pursuant to these performance share units. If the minimum performance thresholds are not met, 43,027 shares would be issued at the end of the performance period.

2015 Performance Share Units

During the year ended December 31, 2015, the Company granted 107,623 performance share units with a grant date fair value of $133.2 million, based on a weighted-average grant date fair value per share of $1,237.53. The actual number of shares to be issued will be determined upon completion of the performance period which generally ends December 31, 2017.

At September 30, 2017, there were 71,475 unvested 2015 performance share units outstanding, net of performance share units that were forfeited or vested since the grant date. As of September 30, 2017, the number of shares estimated to be issued pursuant to these performance share units at the end of the performance period is a total of 124,617 shares. If the maximum thresholds are met at the end of the performance period, a maximum of 177,351 total shares could be issued pursuant to these performance share units. If the minimum performance thresholds are not met, 41,480 shares would be issued at the end of the performance period.

13

Stock Options

All outstanding employee stock options were assumed in acquisitions. The following table summarizes the activity for stock options during the nine months ended September 30, 2017:

Employee Stock Options

Number of Shares

Weighted-Average Exercise Price

Aggregate

Intrinsic Value (in thousands)

Weighted-Average Remaining Contractual Term (in years)

Balance, December 31, 2016

48,983

$

372.07

$

53,587

4.4

Exercised

(14,236

)

$

301.68

Forfeited

(948

)

$

837.90

Balance, September 30, 2017

33,799

$

388.65

$

48,744

4.0

Vested and exercisable as of September 30, 2017

33,400

$

383.56

$

48,338

4.0

Vested and exercisable as of September 30, 2017 and expected to vest thereafter

33,799

$

388.65

$

48,744

4.0

The aggregate intrinsic value of employee stock options that were exercised during the nine months ended September 30, 2017 and 2016 was $21.4 million and $31.8 million, respectively. During the nine months ended September 30, 2017 and 2016, stock options vested for 1,246 and 11,376 shares of common stock, respectively, with an aggregate acquisition-date fair value of $0.8 million and $7.1 million, respectively.

For the three and nine months ended September 30, 2017, the Company recorded stock-based compensation expense related to employee stock options of $0.2 million and $0.7 million, respectively, and $1.0 million and $6.3 million for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, there was $0.2 million of total future compensation costs related to unvested employee stock options to be recognized over a weighted-average period of 0.4 years.

3.NET INCOME PER SHARE

The Company computes basic net income per share by dividing net income applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period.

Common equivalent shares related to stock options, restricted stock units and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.

The Company's convertible notes have net share settlement features requiring the Company upon conversion to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock, at the Company's option. The convertible notes are included in the calculation of diluted net income per share if their inclusion is dilutive under the treasury stock method.

14

A reconciliation of the weighted-average number of shares outstanding used in calculating diluted earnings per share is as follows (in thousands):

Weighted-average number of diluted common and common equivalent shares outstanding

49,972

49,975

50,064

50,048

Anti-dilutive potential common shares

1,948

2,472

2,006

2,538

Anti-dilutive potential common shares for the three and nine months ended September 30, 2017 include approximately 1.5 million and 1.6 million shares, respectively, that could be issued under the Company's outstanding convertible notes. Under the treasury stock method, the convertible notes will generally have an anti-dilutive impact on net income per share if the conversion prices for the convertible notes exceed the Company's average stock price.

4.INVESTMENTS

Short-term and Long-term Investments in Available-for-sale Securities

The following table summarizes, by major security type, the Company's investments as of September 30, 2017 (in thousands):

Cost

Gross

Unrealized Gains

Gross

Unrealized Losses

Fair

Value

Short-term investments:

International government securities

$

690,728

$

684

$

(270

)

$

691,142

U.S. government securities

844,214

42

(596

)

843,660

Corporate debt securities

2,818,705

1,052

(1,529

)

2,818,228

Commercial paper

53,998

—

—

53,998

Total short-term investments

$

4,407,645

$

1,778

$

(2,395

)

$

4,407,028

Long-term investments:

International government securities

$

591,294

$

2,451

$

(237

)

$

593,508

U.S. government securities

1,010,179

102

(6,495

)

1,003,786

Corporate debt securities

6,864,642

16,184

(22,272

)

6,858,554

U.S. government agency securities

4,953

—

(26

)

4,927

Ctrip convertible debt securities

1,275,000

237,638

—

1,512,638

Ctrip equity securities

655,311

485,590

—

1,140,901

Total long-term investments

$

10,401,379

$

741,965

$

(29,030

)

$

11,114,314

The Company's investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. As of September 30, 2017, the weighted-average life of the Company’s fixed income investment portfolio, excluding the Company's investment in Ctrip convertible debt securities, was approximately 1.6 years with an average credit quality of A+/A1/A+.

The Company invests in international government securities with high credit quality. As of September 30, 2017, investments in international government securities principally included debt securities issued by the governments of the Netherlands, Belgium, France, Germany, Austria and Finland.

15

The following table summarizes, by major security type, the Company's investments as of December 31, 2016 (in thousands):

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair

Value

Short-term investments:

International government securities

$

249,552

$

221

$

(89

)

$

249,684

U.S. government securities

456,971

57

(140

)

456,888

Corporate debt securities

1,510,119

1,119

(928

)

1,510,310

Commercial paper

1,998

—

—

1,998

Total short-term investments

$

2,218,640

$

1,397

$

(1,157

)

$

2,218,880

Long-term investments:

International government securities

$

655,857

$

4,110

$

(623

)

$

659,344

U.S. government securities

773,718

337

(7,463

)

766,592

Corporate debt securities

6,042,271

9,973

(50,455

)

6,001,789

U.S. government agency securities

4,979

—

(27

)

4,952

Ctrip convertible debt securities

1,275,000

65,800

(47,712

)

1,293,088

Ctrip equity securities

655,311

213,233

(3,242

)

865,302

Total long-term investments

$

9,407,136

$

293,453

$

(109,522

)

$

9,591,067

The Company has classified its investments as available-for-sale securities. These securities are carried at estimated fair value with the aggregate unrealized gains and losses related to these investments, net of taxes, reflected as a part of "Accumulated other comprehensive income (loss)" in the Unaudited Consolidated Balance Sheets. Classification as short-term or long-term investment is based upon the maturity of the debt securities.

The Company recognized net realized gains of $0.3 million and $0.5 million for the three and nine months ended September 30, 2017, respectively, and net realized gains of $0.9 million and $0.1 million for the three and nine months ended September 30, 2016, respectively, related to investments. As of September 30, 2017, the Company does not consider any of its investments to be other-than-temporarily impaired.

Investments in Ctrip Available-for-sale Securities

On May 26, 2015 and August 7, 2014, the Company invested $250 million and $500 million, respectively, in five-year senior convertible notes issued at par by Ctrip. On December 11, 2015, the Company invested $500 million in a Ctrip ten-year senior convertible note issued at par value, which included a put option allowing the Company, at its option, to require a prepayment in cash from Ctrip at the end of the sixth year of the note. On September 12, 2016, the Company invested $25 million in a Ctrip six-year senior convertible note issued at par value, which included a put option allowing the Company, at its option, to require prepayment in cash from Ctrip at the end of the third year of the note. The Company determined that the economic characteristics and risks of these put options are clearly and closely related to the host contract, and therefore were not embedded derivatives.

The Company evaluated the conversion features for all Ctrip senior convertible notes and only the conversion feature associated with the September 2016 investment met the definition of an embedded derivative (see Note 5). The Company monitors the conversion features of these notes to determine whether they meet the definition of an embedded derivative during each reporting period. As of September 30, 2017, the Company had also invested $655.3 million of its international cash in Ctrip American Depositary Shares ("ADSs"). The convertible debt and equity securities of Ctrip have been marked-to-market in accordance with the accounting guidance for available-for-sale securities.

In connection with the Company's investments in Ctrip's convertible notes, Ctrip granted the Company the right to appoint an observer to its board of directors and permission to acquire its shares (through the acquisition of Ctrip ADSs in the open market) so that combined with ADSs issuable upon conversion of the August 2014, May 2015 and September 2016 convertible notes, the Company could hold up to an aggregate of approximately 15% of Ctrip's outstanding equity plus any ADSs issuable upon the conversion of the December 2015 convertible notes. As of September 30, 2017, the Company did not have significant influence over Ctrip.

16

Cost-method Investments

The Company held investments in equity securities of private companies, which are typically at an early stage of development, of approximately $8.2 million and $7.6 million at September 30, 2017 and December 31, 2016, respectively. The investments are accounted for under the cost method and included in "Other assets" in the Company's Unaudited Consolidated Balance Sheets.

For the nine months ended September 30, 2016, the Company recognized an impairment of $63.2 million, which wrote off its entire investments in two other private companies.

On October 23, 2017, the Company invested $450 million in Meituan-Dianping through the purchase of preferred shares using its international cash.

5.FAIR VALUE MEASUREMENTS

Financial assets and liabilities carried at fair value as of September 30, 2017 are classified in the tables below in the categories described below (in thousands):

Level 1

Level 2

Total

ASSETS:

Cash equivalents:

Money market funds

$

2,013,334

$

—

$

2,013,334

International government securities

—

21,308

21,308

U.S. government securities

—

27,625

27,625

Corporate debt securities

—

15,397

15,397

Commercial paper

—

77,319

77,319

U.S. government agency securities

—

4,800

4,800

Time deposits

4,532

—

4,532

Short-term investments:

International government securities

—

691,142

691,142

U.S. government securities

—

843,660

843,660

Corporate debt securities

—

2,818,228

2,818,228

Commercial paper

—

53,998

53,998

Long-term investments:

International government securities

—

593,508

593,508

U.S. government securities

—

1,003,786

1,003,786

Corporate debt securities

—

6,858,554

6,858,554

U.S. government agency securities

—

4,927

4,927

Ctrip convertible debt securities

—

1,512,638

1,512,638

Ctrip equity securities

1,140,901

—

1,140,901

Derivatives:

Currency exchange derivatives

—

80

80

Total assets at fair value

$

3,158,767

$

14,526,970

$

17,685,737

Level 1

Level 2

Total

LIABILITIES:

Currency exchange derivatives

$

—

$

1,693

$

1,693

17

Financial assets and liabilities carried at fair value as of December 31, 2016 are classified in the tables below in the categories described below (in thousands):

Level 1

Level 2

Total

ASSETS:

Cash equivalents:

Money market funds

$

977,468

$

—

$

977,468

International government securities

—

30,266

30,266

U.S. government securities

—

176,140

176,140

Corporate debt securities

—

9,273

9,273

Commercial paper

—

1,998

1,998

Time deposits

49,160

—

49,160

Short-term investments:

International government securities

—

249,684

249,684

U.S. government securities

—

456,888

456,888

Corporate debt securities

—

1,510,310

1,510,310

Commercial paper

—

1,998

1,998

Long-term investments:

International government securities

—

659,344

659,344

U.S. government securities

—

766,592

766,592

Corporate debt securities

—

6,001,789

6,001,789

U.S. government agency securities

—

4,952

4,952

Ctrip convertible debt securities

—

1,293,088

1,293,088

Ctrip equity securities

865,302

—

865,302

Derivatives:

Currency exchange derivatives

—

756

756

Total assets at fair value

$

1,891,930

$

11,163,078

$

13,055,008

Level 1

Level 2

Total

LIABILITIES:

Currency exchange derivatives

$

—

$

1,015

$

1,015

There are three levels of inputs to measure fair value. The definition of each input is described below:

Level 1:

Quoted prices in active markets that are accessible by the Company at the measurement date for

identical assets and liabilities.

Level 2:

Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted

prices for identical or comparable securities in active markets or inputs not quoted on active

markets, but corroborated by market data.

Level 3:

Unobservable inputs are used when little or no market data is available.

Investments in corporate debt securities, U.S. and international government securities, commercial paper, government agency securities and convertible debt securities are considered "Level 2" valuations because the Company has access to quoted prices, but does not have visibility to the volume and frequency of trading for all of these investments. For the Company's investments, a market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.

The Company's derivative instruments are valued using pricing models. Pricing models take into account the contract terms as well as multiple inputs where applicable, such as interest rate yield curves, option volatility and currency rates. Derivatives are considered "Level 2" fair value measurements. The Company's derivative instruments are typically short-term in nature.

18

As of September 30, 2017 and December 31, 2016, the Company's cash consisted of bank deposits. Other financial assets and liabilities, including restricted cash, accounts receivable, accounts payable, accrued expenses and deferred merchant bookings are carried at cost which approximates their fair value because of the short-term nature of these items. At September 30, 2017 and December 31, 2016, the Company held investments in equity securities of private companies of $8.2 million and $7.6 million, respectively, and these investments are accounted for under the cost method of accounting (see Note 4). See Note 4 for information on the carrying value of available-for-sale investments, Note 7 for the estimated fair value of the Company's outstanding Senior Notes and Note 11 for the Company's contingent liabilities associated with business acquisitions.

In the normal course of business, the Company is exposed to the impact of foreign currency fluctuations. The Company limits these risks by following established risk management policies and procedures, including the use of derivatives. The Company does not use derivatives for trading or speculative purposes. All derivative instruments are recognized in the Unaudited Consolidated Balance Sheets at fair value. Gains and losses resulting from changes in the fair value of derivative instruments that are not designated as hedging instruments for accounting purposes are recognized in the Unaudited Consolidated Statements of Operations in the period that the changes occur. Changes in the fair value of derivatives designated as net investment hedges are recorded as foreign currency translation adjustments to offset a portion of the foreign currency translation adjustment from Euro-denominated net assets held by certain subsidiaries and are recognized in the Unaudited Consolidated Balance Sheets in "Accumulated other comprehensive income (loss)."

Derivatives Not Designated as Hedging Instruments — The Company is exposed to adverse movements in currency exchange rates as the operating results of its international operations are translated from local currency into U.S. Dollars upon consolidation. The Company enters into average-rate derivative contracts to hedge translation risks from short-term foreign exchange rate fluctuations for the Euro, British Pound Sterling and certain other currencies versus the U.S. Dollar. As of September 30, 2017 and December 31, 2016, there were no outstanding derivative contracts related to foreign currency translation risks. Derivatives associated with these translation risks resulted in foreign currency losses of $1.1 million and $1.3 million for the three and nine months ended September 30, 2017, respectively, and are recorded in "Foreign currency transactions and other" in the Unaudited Consolidated Statements of Operations. The impact of foreign exchange fluctuations was insignificant for the three and nine months ended September 30, 2016.

The Company also enters into foreign currency forward contracts to hedge its exposure to the impact of movements in currency exchange rates on its transactional balances denominated in currencies other than the functional currency. Foreign currency derivatives outstanding as of September 30, 2017 associated with foreign currency transaction risks resulted in a net liability of $1.6 million, with a liability in the amount of $1.7 million recorded in "Accrued expenses and other current liabilities" and an asset in the amount of $0.1 million recorded in "Prepaid expenses and other current assets" in the Unaudited Consolidated Balance Sheet. Foreign currency derivatives outstanding as of December 31, 2016 associated with foreign currency transaction risks resulted in a net liability of $0.3 million, with a liability in the amount of $1.0 million recorded in "Accrued expenses and other current liabilities" and an asset in the amount of $0.7 million recorded in "Prepaid expenses and other current assets" in the Unaudited Consolidated Balance Sheet. Derivatives associated with these transaction risks resulted in foreign currency gains of $10.7 million and $38.3 million for the three and nine months ended September 30, 2017, respectively, and foreign currency gains of $5.0 million and $21.0 million for the three and nine months ended September 30, 2016, respectively. These mark-to-market adjustments on the derivative contracts, offset by the effect of changes in currency exchange rates on transactions denominated in currencies other than the functional currency, resulted in net losses of $7.6 million and $18.7 million for the three and nine months ended September 30, 2017, respectively, compared to net losses of $3.6 million and $10.6 million for the three and nine months ended September 30, 2016, respectively. The net impacts related to these derivatives are recorded in "Foreign currency transactions and other" in the Unaudited Consolidated Statements of Operations.

The settlement of derivative contracts not designated as hedging instruments resulted in net cash inflows of $38.2 million and $34.3 million for the nine months ended September 30, 2017 and 2016, respectively, and are reported within "Net cash provided by operating activities" in the Unaudited Consolidated Statements of Cash Flows.

Embedded Derivative — In September 2016, the Company invested $25 million in a Ctrip convertible note (see Note 4). The Company determined that the conversion option for this note met the definition of an embedded derivative. At September 30, 2017 and December 31, 2016, the embedded derivative had an estimated fair value of $3.5 million and $1.8 million, respectively, and is reported in the Unaudited Consolidated Balance Sheets with its host contract in "Long-term investments." The embedded derivative is bifurcated for measurement purposes only and the mark-to-market for the three and nine months ended September 30, 2017 was a loss of $0.3 million and a gain of $1.7 million, respectively, which is included in "Foreign currency transactions and other" in the Company's Unaudited Consolidated Statement of Operations.

19

6.INTANGIBLE ASSETS AND GOODWILL

The Company's intangible assets at September 30, 2017 and December 31, 2016 consisted of the following (in thousands):

September 30, 2017

December 31, 2016

Gross

Carrying

Amount

Accumulated

Amortization

Net

Carrying

Amount

Gross

Carrying

Amount

Accumulated

Amortization

Net

Carrying

Amount

AmortizationPeriod

Weighted Average Useful Life

Supply and distribution agreements

$

1,050,965

$

(335,538

)

$

715,427

$

809,287

$

(270,813

)

$

538,474

3 - 20 years

16 years

Technology

136,667

(98,008

)

38,659

112,141

(80,549

)

31,592

1 - 5 years

5 years

Patents

1,623

(1,623

)

—

1,623

(1,598

)

25

15 years

15 years

Internet domain names

41,620

(27,616

)

14,004

39,495

(25,089

)

14,406

2 - 20 years

8 years

Trade names

1,777,146

(327,403

)

1,449,743

1,667,221

(261,412

)

1,405,809

4-20 years

19 years

Non-compete agreements

21,900

(21,581

)

319

21,900

(18,321

)

3,579

3-4 years

3 years

Total intangible assets

$

3,029,921

$

(811,769

)

$

2,218,152

$

2,651,667

$

(657,782

)

$

1,993,885

Intangible assets are amortized on a straight-line basis. Intangible asset amortization expense was approximately $45.3 million and $129.5 million for the three and nine months ended September 30, 2017, respectively, and $42.0 million and $127.4 million for the three and nine months ended September 30, 2016, respectively.

The amortization expense for intangible assets for the remainder of 2017, the annual expense for the next five years, and the expense thereafter is expected to be as follows (in thousands):

Remainder of 2017

$

46,160

2018

171,825

2019

160,335

2020

152,397

2021

146,295

2022

143,507

Thereafter

1,397,633

$

2,218,152

The change in goodwill for the nine months ended September 30, 2017 consisted of the following (in thousands):

Balance at December 31, 2016

$

2,396,906

Acquisitions

292,705

Foreign currency translation adjustments

38,286

Balance at September 30, 2017

$

2,727,897

Annual Goodwill Impairment Test

A substantial portion of the Company's intangibles and goodwill relates to the acquisition of OpenTable in July 2014 and KAYAK in May 2013. As of September 30, 2017, the Company performed its annual quantitative goodwill impairment

20

test. Other than OpenTable, the fair values of the Company’s reporting units substantially exceeded their respective carrying values.

OpenTable

The Company estimated OpenTable’s fair value using a combination of standard valuation techniques, including an income approach (discounted cash flows) and market approaches (EBITDA multiples of comparable publicly-traded companies and precedent transactions). At September 30, 2017, OpenTable's fair value was approximately 18% higher than its fair value at September 30, 2016, which reflects performance that exceeded forecast.

Despite this increase in fair value, OpenTable's carrying value was approximately 6% higher than its fair value at September 30, 2017, thus failing Step 1 of the goodwill impairment test. Therefore, the Company engaged a third-party valuation firm to develop a hypothetical purchase price allocation (Step 2). The results of Step 2 indicate there is no goodwill impairment at September 30, 2017 because the implied fair value of OpenTable's goodwill exceeded its carrying value by approximately 24%. In addition, the Company tested the recoverability of OpenTable’s other long-lived assets and concluded there was no impairment as of September 30, 2017.

During the three months ended September 30, 2016, the Company recognized a non-cash impairment charge for goodwill of $940.7 million, which was not tax deductible.

Acquisitions

On July 24, 2017, the Company completed the previously announced acquisition of the Momondo Group, which operates the travel meta-search websites momondo and Cheapflights, for $555.5 million, and will be managed as part of the Company's KAYAK business. The acquisition was funded using the Company's international cash.

The preliminary purchase price allocation in the third quarter of 2017 resulted in recognition of definite-lived intangible assets of $333.8 million, which consisted of distribution agreements of $214.0 million with a weighted-average useful life of 15 years, trade names of $104.4 million with a weighted-average useful life of 13 years and technology of $15.4 million with a weighted-average life of 4 years, and goodwill of $287.2 million.

The Company's Unaudited Consolidated Financial Statements include the accounts of the Momondo Group beginning July 24, 2017. Revenues and earnings of this business since the acquisition date and pro forma results of operations have not been presented separately as such financial information is not material to the Company's results of operations.

7.DEBT

Revolving Credit Facility

In June 2015, the Company entered into a $2.0 billionfive-year unsecured revolving credit facility with a group of lenders. Borrowings under the revolving credit facility will bear interest, at the Company’s option, at a rate per annum equal to either (i) the adjusted LIBOR for the interest period in effect for such borrowing plus an applicable margin ranging from 0.875% to 1.50%; or (ii) the greatest of (a) Bank of America, N.A.'s prime lending rate, (b) the federal funds rate plus 0.50%, and (c) an adjusted LIBOR for an interest period of one month plus 1.00%, plus an applicable margin ranging from 0.00% to 0.50%. Undrawn balances available under the revolving credit facility are subject to commitment fees at the applicable rate ranging from 0.085% to 0.20%.

The revolving credit facility provides for the issuance of up to $70.0 million of letters of credit as well as borrowings of up to $50.0 million on same-day notice, referred to as swingline loans. Borrowings under the revolving credit facility may be made in U.S. Dollars, Euros, British Pounds Sterling and any other foreign currency agreed to by the lenders. The proceeds of loans made under the facility would be used for working capital and general corporate purposes, which could include acquisitions, share repurchases or debt repayments. There were no borrowings outstanding and approximately $3.8 million of letters of credit issued under the facility at September 30, 2017 and December 31, 2016.

21

Outstanding Debt

Outstanding debt as of September 30, 2017 consisted of the following (in thousands):

September 30, 2017

Outstanding

Principal

Amount

Unamortized Debt

Discount and Debt

Issuance Cost

Carrying

Value

Short-term debt:

1.0% Convertible Senior Notes due March 2018

$

910,438

$

(10,636

)

$

899,802

Long-term debt:

0.35% Convertible Senior Notes due June 2020

$

1,000,000

$

(71,257

)

$

928,743

0.9% Convertible Senior Notes due September 2021

1,000,000

(88,664

)

911,336

0.8% (€1 Billion) Senior Notes due March 2022

1,182,200

(6,574

)

1,175,626

2.15% (€750 Million) Senior Notes due November 2022

886,650

(4,885

)

881,765

2.75% Senior Notes due March 2023

500,000

(3,364

)

496,636

2.375% (€1 Billion) Senior Notes due September 2024

1,182,200

(12,544

)

1,169,656

3.65% Senior Notes due March 2025

500,000

(3,400

)

496,600

3.6% Senior Notes due June 2026

1,000,000

(7,035

)

992,965

1.8% (€1 Billion) Senior Notes due March 2027

1,182,200

(5,270

)

1,176,930

3.55% Senior Notes due March 2028

500,000

(3,578

)

496,422

Total long-term debt

$

8,933,250

$

(206,571

)

$

8,726,679

Outstanding debt as of December 31, 2016 consisted of the following (in thousands):

December 31, 2016

Outstanding

Principal

Amount

Unamortized Debt

Discount and Debt

Issuance Cost

Carrying

Value

Short-term debt:

1.0% Convertible Senior Notes due March 2018

$

1,000,000

$

(32,266

)

$

967,734

Long-term debt:

0.35% Convertible Senior Notes due June 2020

$

1,000,000

$

(90,251

)

$

909,749

0.9% Convertible Senior Notes due September 2021

1,000,000

(104,592

)

895,408

2.15% (€750 Million) Senior Notes due November 2022

791,063

(5,336

)

785,727

2.375% (€1 Billion) Senior Notes due September 2024

1,054,750

(12,861

)

1,041,889

3.65% Senior Notes due March 2025

500,000

(3,727

)

496,273

3.6% Senior Notes due June 2026

1,000,000

(7,619

)

992,381

1.8% (€1 Billion) Senior Notes due March 2027

1,054,750

(5,655

)

1,049,095

Total long-term debt

$

6,400,563

$

(230,041

)

$

6,170,522

Based upon the closing price of the Company's common stock for the prescribed measurement periods for the three months ended September 30, 2017 and December 31, 2016, the contingent conversion threshold on the 2018 Notes (as defined below) was exceeded. Therefore, the 2018 Notes, which mature in March 2018, were convertible at the option of the holders and, accordingly, the Company reported the carrying value of the 2018 Notes as a current liability in the Company's Unaudited Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016. Since these notes are convertible at the option of the holders and the principal amount is required to be paid in cash, the Company reclassified the unamortized debt discount for the 2018 Notes in the amount of $9.4 million and $28.5 million before tax as of September 30, 2017 and December 31, 2016, respectively, from additional paid-in-capital to convertible debt in the mezzanine section in the Company's Unaudited Consolidated Balance Sheets. As of December 15, 2017, holders of 2018 Notes will have the right to convert all or any remaining principal amount outstanding.

The contingent conversion thresholds on the 2020 Notes (as defined below) and the 2021 Notes (as defined below) were not exceeded at September 30, 2017 or December 31, 2016, and therefore these notes were reported as a non-current liability in the Unaudited Consolidated Balance Sheets.

22

Fair Value of Debt

As of September 30, 2017 and December 31, 2016, the estimated fair value of the outstanding Senior Notes was approximately $11.5 billion and $8.4 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 5). Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. A substantial portion of the market value of the Company's debt in excess of the outstanding principal amount relates to the conversion premium on the Convertible Senior Notes.

Convertible Debt

If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount. In cases where holders decide to convert prior to the maturity date, the Company charges the proportionate amount of remaining debt issuance costs to interest expense. For the nine months ended September 30, 2017, the Company paid $89.6 million to satisfy the aggregate principal amount due and issued 46,437 shares of its common stock in satisfaction of the conversion value in excess of the principal amount for debt converted prior to maturity. During the period from October 1, 2017 through November 3, 2017, the Company received notices for conversion of $196.1 million aggregate principal amount of our 2018 Notes.

In addition, if the Company's convertible debt is redeemed or converted prior to maturity, a gain or loss on extinguishment is recognized. The gain or loss is the difference between the fair value of the debt component immediately prior to extinguishment and its carrying value. To estimate the fair value of the debt at the conversion date, the Company estimated its straight debt borrowing rate, considering its credit rating and straight debt of comparable corporate issuers. For the nine months ended September 30, 2017, the Company recognized a non-cash loss $1.1 million ($0.7 million after tax) in "Foreign currency transactions and other" in the Unaudited Consolidated Statement of Operations in connection with the early conversion of the 2018 Notes.

Description of Senior Convertible Notes

In March 2012, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due March 15, 2018, with an interest rate of 1.0% (the "2018 Notes"). The Company paid $20.9 million in debt issuance costs during the year ended December 31, 2012 related to this offering. The 2018 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of approximately $944.61 per share. The 2018 Notes are convertible, at the option of the holder, prior to March 15, 2018, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 150% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the 2018 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the 2018 Notes in aggregate value ranging from $0 to approximately $344 million depending upon the date of the transaction and the then current stock price of the Company. As of December 15, 2017, holders will have the right to convert all or any portion of the 2018 Notes. The 2018 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the 2018 Notes for cash in certain circumstances. Interest on the 2018 Notes is payable on March 15 and September 15 of each year.

In May 2013, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due June 15, 2020, with an interest rate of 0.35% (the "2020 Notes"). The 2020 Notes were issued with an initial discount of $20.0 million. The Company paid $1.0 million in debt issuance costs during the year ended December 31, 2013 related to this offering. The 2020 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of approximately $1,315.10 per share. The 2020 Notes are convertible, at the option of the holder, prior to June 15, 2020, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 150% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the 2020 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the 2020 Notes in an aggregate value ranging from $0 to approximately $397 million depending upon the date of the transaction and the then current stock price of the Company. As of

23

March 15, 2020, holders will have the right to convert all or any portion of the 2020 Notes. The 2020 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the 2020 Notes for cash in certain circumstances. Interest on the 2020 Notes is payable on June 15 and December 15 of each year.

In August 2014, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due September 15, 2021, with an interest rate of 0.9% (the "2021 Notes"). The Company paid $11.0 million in debt issuance costs during the year ended December 31, 2014 related to this offering. The 2021 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of approximately $2,055.50 per share. The 2021 Notes are convertible, at the option of the holder, prior to September 15, 2021, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 150% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the 2021 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the 2021 Notes in an aggregate value ranging from $0 to approximately $375 million depending upon the date of the transaction and the then current stock price of the Company. As of June 15, 2021, holders will have the right to convert all or any portion of the 2021 Notes. The 2021 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the 2021 Notes for cash in certain circumstances. Interest on the 2021 Notes is payable on March 15 and September 15 of each year.

Cash-settled convertible debt, such as the Company's Convertible Senior Notes, is separated into debt and equity components at issuance and each component is assigned a value. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, is recorded as a debt discount. Debt discount is amortized using the effective interest rate method over the period from the origination date through the stated maturity date. The Company estimated the straight debt borrowing rates at debt origination to be 3.50% for the 2018 Notes, 3.13% for the 2020 Notes and 3.18% for the 2021 Notes. The yield to maturity was estimated at an at-market coupon priced at par.

Debt discount after tax of $80.9 million ($135.2 million before tax) less financing costs associated with the equity component of convertible debt of $2.8 million after tax was recorded in additional paid-in capital related to the 2018 Notes at March 31, 2012. Debt discount after tax of $92.4 million ($154.3 million before tax) less financing costs associated with the equity component of convertible debt of $0.1 million after tax was recorded in additional paid-in capital related to the 2020 Notes at June 30, 2013. Debt discount after tax of $82.5 million ($142.9 million before tax) less financing costs associated with the equity component of convertible debt of $1.6 million after tax was recorded in additional paid-in capital related to the 2021 Notes at December 31, 2014.

For the three months ended September 30, 2017 and 2016, the Company recognized interest expense of $23.4 million and $23.7 million, respectively, related to convertible notes, which was comprised of $5.4 million and $5.6 million, respectively, related to the contractual coupon interest, $16.9 million for each period related to the amortization of debt discount, and $1.1 million and $1.2 million, respectively, related to the amortization of debt issuance costs. For the three months ended September 30, 2017 and 2016, included in the amortization of debt discount mentioned above was $0.8 million and $0.7 million, respectively, of original issuance discount related to the 2020 Notes. The remaining period for amortization of debt discount and debt issuance costs is the period until the stated maturity date for the respective debt. The weighted-average effective interest rate related to convertible notes was 3.4% for both the three months ended September 30, 2017 and 2016.

For the nine months ended September 30, 2017 and 2016, the Company recognized interest expense of $71.4 million and $70.6 million, respectively, related to convertible notes, which was comprised of $16.4 million and $16.8 million, respectively, related to the contractual coupon interest, $51.4 million and $50.4 million, respectively, related to the amortization of debt discount, and $3.6 million and $3.4 million, respectively, related to the amortization of debt issuance costs. For the nine months ended September 30, 2017 and 2016, included in the amortization of debt discount mentioned above was $2.2 million and $2.1 million, respectively, of original issuance discount related to the 2020 Notes. The remaining period for amortization of debt discount and debt issuance costs is the period until the stated maturity date for the respective debt. The weighted-average effective interest rates related to convertible notes was 3.4% for the nine months ended September 30, 2017 and 2016.

In addition, for the nine months ended September 30, 2017, the Company recognized interest expense of $0.2 million to write off the unamortized debt issuance cost for debt converted prior to maturity.

24

Other Long-term Debt

In March 2017, the Company issued Senior Notes due March 10, 2022, with an interest rate of 0.8% (the "March 2022 Notes") for an aggregate principal amount of 1.0 billion Euros. The March 2022 Notes were issued with an initial discount of 2.1 million Euros. In addition, the Company paid $5.0 million in debt issuance costs during the nine months ended September 30, 2017. Interest on the March 2022 Notes is payable annually on March 10, beginning March 10, 2018. Subject to certain limited exceptions, all payments of interest and principal for the March 2022 Notes will be made in Euros.

In November 2015, the Company issued Senior Notes due November 25, 2022, with an interest rate of 2.15% (the "November 2022 Notes") for an aggregate principal amount of 750 million Euros. The November 2022 Notes were issued with an initial discount of 2.2 million Euros. In addition, the Company paid $3.7 million in debt issuance costs during the year ended December 31, 2015. Interest on the November 2022 Notes is payable annually on November 25. Subject to certain limited exceptions, all payments of interest and principal, including payments made upon any redemption of the November 2022 Notes will be made in Euros.

In August 2017, the Company issued Senior Notes due March 15, 2023, with an interest rate of 2.75% (the "2023 Notes") for an aggregate principal amount of $500 million. The 2023 Notes were issued with an initial discount of $0.7 million. In addition, the Company paid $2.6 million in debt issuance costs during the three months ended September 30, 2017. Interest on the 2023 Notes is payable semi-annually on March 15 and September 15, beginning March 15, 2018.

In September 2014, the Company issued Senior Notes due September 23, 2024, with an interest rate of 2.375% (the "2024 Notes") for an aggregate principal amount of 1.0 billion Euros. The 2024 Notes were issued with an initial discount of 9.4 million Euros. In addition, the Company paid $6.5 million in debt issuance costs during the year ended December 31, 2014. Interest on the 2024 Notes is payable annually on September 23. Subject to certain limited exceptions, all payments of interest and principal for the 2024 Notes will be made in Euros.

In March 2015, the Company issued Senior Notes due March 15, 2025, with an interest rate of 3.65% (the "2025 Notes") for an aggregate principal amount of $500 million. The 2025 Notes were issued with an initial discount of $1.3 million. In addition, the Company paid $3.2 million in debt issuance costs during the year ended December 31, 2015. Interest on the 2025 Notes is payable semi-annually on March 15 and September 15.

In May 2016, the Company issued Senior Notes due June 1, 2026, with an interest rate of 3.6% (the "2026 Notes") for an aggregate principal amount of $1.0 billion. The 2026 Notes were issued with an initial discount of $1.9 million. In addition, the Company paid $6.2 million in debt issuance costs during the year ended December 31, 2016. Interest on the 2026 Notes is payable semi-annually on June 1 and December 1.

In March 2015, the Company issued Senior Notes due March 3, 2027, with an interest rate of 1.8% (the "2027 Notes") for an aggregate principal amount of 1.0 billion Euros. The 2027 Notes were issued with an initial discount of 0.3 million Euros. In addition, the Company paid $6.3 million in debt issuance costs during the year ended December 31, 2015. Interest on the 2027 Notes is payable annually on March 3. Subject to certain limited exceptions, all payments of interest and principal for the 2027 Notes will be made in Euros.

In August 2017, the Company issued Senior Notes due March 15, 2028, with an interest rate of 3.55% (the "2028 Notes") for an aggregate principal amount of $500 million. The 2028 Notes were issued with an initial discount of $0.4 million. In addition, the Company paid $3.1 million in debt issuance costs during the three months ended September 30, 2017. Interest on the 2028 Notes is payable semi-annually on March 15 and September 15, beginning March 15, 2018.

The aggregate principal value of the March 2022 Notes, November 2022 Notes, 2024 Notes and 2027 Notes and accrued interest thereon are designated as a hedge of the Company's net investment in certain Euro functional currency subsidiaries. The foreign currency transaction gains or losses on these liabilities are measured based upon changes in spot rates and are recorded in "Accumulated other comprehensive income (loss)" in the Unaudited Consolidated Balance Sheets. The Euro-denominated net assets of these subsidiaries are translated into U.S. Dollars at each balance sheet date, with effects of foreign currency changes also reported in "Accumulated other comprehensive income (loss)" in the Unaudited Consolidated Balance Sheets. Since the notional amount of the recorded Euro-denominated debt and related interest are not greater than the notional amount of the Company's net investment, the Company does not expect to incur any ineffectiveness on this hedge.

Debt discount is amortized using the effective interest rate method over the period from the origination date through the stated maturity date. The Company estimated the effective interest rates at debt origination to be 0.84% for the March 2022

25

Notes, 2.20% for the November 2022 Notes, 2.78% for the 2023 Notes, 2.48% for the 2024 Notes, 3.68% for the 2025 Notes, 3.62% for the 2026 Notes, 1.80% for the 2027 Notes and 3.56% for the 2028 Notes.

For the three months ended September 30, 2017 and 2016, the Company recognized interest expense of $38.5 million and $30.8 million, respectively, related to other long-term debt, which was comprised of $36.9 million and $29.7 million, respectively, for the contractual coupon interest, $0.6 million and $0.4 million, respectively, related to the amortization of debt discount and $1.0 million and $0.7 million, respectively, related to the amortization of debt issuance costs. The remaining period for amortization of debt discount and debt issuance costs is the period until the stated maturity dates for the respective debt.

For the nine months ended September 30, 2017 and 2016, the Company recognized interest expense of $102.2 million and $77.7 million, respectively, related to other long-term debt, which was comprised of $98.1 million and $74.8 million, respectively, for the contractual coupon interest, $1.5 million and $1.1 million, respectively, related to the amortization of debt discount and $2.6 million and $1.8 million, respectively, related to the amortization of debt issuance costs. The remaining period for amortization of debt discount and debt issuance costs is the period until the stated maturity dates for the respective debt.

In March 2016, the Company received a ten-year loan from the State of Connecticut in the amount of $2.5 million with an interest rate of 1% in connection with the construction of office space in Connecticut. In the first quarter of 2017, $1.0 million of the loan was forgiven as a result of meeting certain employment and salary conditions. The remaining balance of the loan will be forgiven in 2019 if certain employment and salary conditions are met. As of September 30, 2017 and December 31, 2016, the loan in the amount of $1.5 million and $2.5 million, respectively, is reported in "Other long-term liabilities" in the Unaudited Consolidated Balance Sheets.

On July 24, 2017, the Company assumed third-party senior debt of $15.1 million associated with the acquisition of the Momondo Group. The debt was repaid by the Company in July 2017.

8.TREASURY STOCK

In the first quarter of 2016, the Company's Board of Directors authorized a program to repurchase up to $3.0 billion of the Company's common stock. In the first quarter of 2017, the Company's Board of Directors authorized an additional program to repurchase up to $2.0 billion of the Company's common stock. As of September 30, 2017, the Company had a remaining authorization of $3.1 billion to purchase its common stock. The Company may make repurchases of shares under its stock repurchase programs, depending on prevailing market conditions, alternate uses of capital and other factors. Whether and when to initiate and/or complete any purchase of common stock and the amount of common stock purchased will be determined at the Company's discretion. Additionally, the Board of Directors has given the Company the general authorization to repurchase shares of its common stock to satisfy employee withholding tax obligations related to stock-based compensation.

In the nine months ended September 30, 2017, the Company repurchased a total of 632,006 shares of its common stock in the open market for an aggregate cost of $1.1 billion, which included 577,568 shares for $1.0 billion acquired through its general repurchase programs and 54,438 shares for $95.1 million withheld to satisfy employee withholding tax obligations related to stock-based compensation. During the period from October 1, 2017 through November 3, 2017, the Company repurchased 86,882 additional shares for an aggregate cost of $166.1 million.

In the nine months ended September 30, 2016, the Company repurchased a total of 581,828 shares of its common stock in the open market for an aggregate cost of $757.5 million, which included 459,694 shares for $598.0 million acquired through its general repurchase programs and 122,134 shares for $159.5 million withheld to satisfy employee withholding tax obligations related to stock-based compensation.

In the three months ended September 30, 2017, stock repurchases in September 2017 of 19,238 shares for an aggregate cost of $35.0 million were settled in October 2017. In the three months ended December 31, 2016, stock repurchases in December 2016 of 10,215 shares for an aggregate cost of $15.0 million were settled in January 2017.

For the nine months ended September 30, 2017 and 2016, the Company remitted $95.5 million and $156.4 million of employee withholding taxes, respectively, to the tax authorities, with the remainder remitted subsequently. The new accounting standard for stock-based compensation (see Note 1) requires us to report the cash remitted to the tax authorities as a financing activity in the statements of cash flows for all periods presented. Prior to the adoption of this new standard, the Company

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reported the aggregate cost of the shares withheld for taxes as a financing activity and the associated unremitted withholding taxes as an operating activity on the cash flow statements.

As of September 30, 2017, there were 13,822,935 shares of the Company's common stock held in treasury.

9.INCOME TAXES

Income tax expense consists of U.S. and international income taxes, determined using an estimate of the Company's annual effective tax rate, which is based upon the applicable tax rates and tax laws of the countries in which the income is generated. A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and operating loss and tax credit carryforwards. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes, and other relevant factors.

The Company's effective tax rates for the three and nine months ended September 30, 2017 were 16.8% and 16.2%, respectively, compared to 36.6% and 25.1% for the three and nine months ended September 30, 2016, respectively. The Company's effective tax rates for the three and nine months ended September 30, 2017 differ from the U.S. federal statutory tax rate of 35%, primarily due to lower international tax rates and current year excess tax benefits of $1.3 million and $13.9 million for the three and nine months ended September 30, 2017, respectively, recognized from the vesting of equity awards pursuant to the adoption of an accounting update effective January 1, 2017 (see Note 1), partially offset by certain non-deductible expenses. The Company's effective tax rates for the three and nine months ended September 30, 2016 differ from the U.S. federal statutory tax rate of 35%, primarily due to the non-deductible impairment charge for goodwill of $940.7 million related to OpenTable recognized in the third quarter of 2016 (see Note 6) and the impairment of the Company's cost-method investment in Hotel Urbano of $60 million recognized in the first half of 2016 (see Note 4), partially offset by lower international tax rates and U.S. state tax law changes in the second quarter of 2016 that resulted in a net decrease to deferred tax liabilities associated with acquired intangible assets.

The Company's effective tax rate was lower for the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016, primarily as a result of the non-deductible impairment charges in 2016 referred to above, an increased proportion of the Company's income being taxed at lower international tax rates due to the growth of the Company's international businesses and current year excess tax benefits recognized from vesting of equity awards. The decrease in the Company's effective tax rate for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, was partially offset by tax benefits recorded in the second quarter of 2016 arising from U.S. state tax law changes that resulted in a net decrease to deferred tax liabilities associated with acquired intangible assets.

During the three and nine months ended September 30, 2017 and 2016, a substantial majority of the Company's income was generated in the Netherlands. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 5% ("Innovation Box Tax") rather than the Dutch statutory rate of 25%. A portion of Booking.com's earnings during the three and nine months ended September 30, 2017 and 2016 qualifies for Innovation Box Tax treatment, which had a significant beneficial impact on the Company's effective tax rate for those periods.

10.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The table below provides the balances for each classification of accumulated other comprehensive income (loss) as of September 30, 2017 and December 31, 2016 (in thousands):

September 30, 2017

December 31, 2016

Foreign currency translation adjustments, net of tax (1)

$

(23,931

)

$

(311,247

)

Net unrealized gain on marketable securities, net of tax (2)

677,597

176,563

Accumulated other comprehensive income (loss)

$

653,666

$

(134,684

)

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(1) Foreign currency translation adjustments, net of tax, at September 30, 2017 and December 31, 2016, include net losses from fair value adjustments of $35.0 million after tax ($52.6 million before tax) associated with previously settled derivatives that were designated as net investment hedges.

Foreign currency translation adjustments, net of tax, include foreign currency transaction losses of $115.0 million after tax ($167.2 million before tax) and foreign currency transaction gains of $182.6 million after tax ($310.4 million before tax) associated with the Company's Euro-denominated debt at September 30, 2017 and December 31, 2016, respectively. The Euro-denominated debt is designated as a hedge of the Company's Euro-denominated net assets (see Note 7).

The remaining balance in foreign currency translation adjustments excludes income taxes as a result of the Company's intention to indefinitely reinvest the earnings of its international subsidiaries outside of the United States.

(2) The net unrealized gains before tax at September 30, 2017 and December 31, 2016 were $711.5 million and $185.9 million, respectively, of which unrealized gains of $575.9 million and $148.5 million, respectively, were exempt from tax in the Netherlands and unrealized gains of $135.6 million and $37.4 million, respectively, were taxable.

11.COMMITMENTS AND CONTINGENCIES

Competition Reviews

The online travel industry has become the subject of investigations by various national competition authorities ("NCAs"), particularly in Europe. The Company is or has been involved in investigations predominantly related to whether Booking.com's contractual parity arrangements with accommodation providers, sometimes also referred to as "most favored nation" or "MFN" provisions, are anti-competitive because they require accommodation providers to provide Booking.com with room rates that are at least as low as those offered to other online travel companies ("OTCs") or through the accommodation provider's website. Some investigations relate to other issues such as reservation and cancellation clauses, commission payments and pricing behavior. For instance, on September 8, 2017 the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland.

In Europe, investigations into Booking.com's price parity provisions were initiated in 2013 and 2014 by NCAs in France, Germany, Italy, Austria, Sweden, Ireland and Switzerland. A number of other NCAs have also looked at these issues. On April 21, 2015, the French, Italian and Swedish NCAs, working in close cooperation with the European Commission, announced that they had accepted "commitments" offered by Booking.com to resolve and close the investigations in France, Italy and Sweden. Under the commitments, Booking.com replaced its existing price parity agreements with accommodation providers with "narrow" price parity agreements. Under a narrow price parity agreement, subject to certain exceptions, an accommodation provider is still required to offer the same or better rates on Booking.com as it offers to a consumer directly online, but it is no longer required to offer the same or better rates on Booking.com as it offers to other OTCs. The commitments also allow an accommodation provider to, among other things, offer different terms and conditions (e.g., free WiFi) and availability to consumers that book with OTCs that offer lower rates of commission or other benefits, offer lower rates to consumers that book through offline channels and continue to discount through, among other things, accommodation loyalty programs, as long as those rates are not published or marketed online. The commitments apply to accommodations in France, Italy and Sweden and were effective on July 1, 2015. The foregoing description is a summary only and is qualified in its entirety by reference to the commitments published by the NCAs on April 21, 2015.

On July 1, 2015, Booking.com voluntarily implemented the commitments given to the French, Italian and Swedish NCAs throughout the European Economic Area and Switzerland. Nearly all NCAs in the European Economic Area have now closed their investigations following Booking.com's implementation of the commitments in their jurisdictions. Booking.com has also agreed with the NCAs in Australia, New Zealand and Georgia to implement the narrow price parity clause in these countries. However, the Australian NCA indicated in February 2017 that it is reassessing narrow price parity clauses between OTCs and accommodation providers. In January 2017, the Turkish NCA imposed fines on Booking.com following an investigation into Booking.com's "wide" parity clauses. Following the Turkish NCA's decision, Booking.com implemented the narrow price parity clause in Turkey. Booking.com is in ongoing discussions with various NCAs in other countries regarding their concerns. The Company is currently unable to predict the long-term impact the implementation of these commitments will have on Booking.com's business, on investigations by other countries, or on industry practice more generally.

On December 23, 2015, the German NCA issued a final decision prohibiting Booking.com's narrow price parity agreements with accommodations in Germany. The German NCA did not issue a fine, but has reserved its position regarding

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an order for disgorgement of profits. Booking.com is appealing the German NCA's decision. An Italian hotel association has appealed the Italian NCA's decision to accept the commitments by Booking.com.

A working group of 10 European NCAs (France, Germany, Belgium, Hungary, Ireland, Italy, the Netherlands, Czech Republic, the United Kingdom and Sweden) was established by the European Commission in December 2015 to monitor the effects of the narrow price parity clause in Europe. This working group (the "ECN Working Group") issued questionnaires during 2016 to OTCs, including Booking.com and Expedia, online price comparison sites (or "meta-search" sites) and hotels about the narrow price parity agreement. On April 6, 2017, the ECN Working Group published the results of this monitoring exercise. The report indicated that the replacement of the "wide" price parity agreement with the narrow price parity agreement generally improved conditions for competition. Although neither the European Commission nor any of the participating NCAs has opened a new investigation following the publication of the report, the ECN Working Group decided to keep the sector under review and re-assess the competitive situation in due course.

The Company is unable to predict how these appeals and the remaining investigations in other countries will ultimately be resolved, or whether further action in Europe will be taken as a result of the ECN Working Group's ongoing review. Possible outcomes include requiring Booking.com to amend or remove its rate parity clause from its contracts with accommodation providers in those jurisdictions and/or the imposition of fines. The Company is unable to predict the impact these possible outcomes might have on its business.

Consumer protection issues, including platform search rankings, are also being reviewed by European NCAs. On October 27, 2017, the United Kingdom's NCA launched a consumer law investigation into the clarity, accuracy and presentation of information on hotel booking sites with a specific focus on the display of search results, claims regarding discounts, methods of "pressure selling" (such as creating false impressions regarding room availability), and failure to disclose hidden charges. The consumer protection department of the German NCA announced the opening of a sector inquiry into online price comparison sites in various sectors including travel and hotels on October 24, 2017. The Company is unable to predict what, if any, effect such actions will have on its business, industry practices or online commerce more generally.

A number of European countries have adopted legislation making price parity agreements illegal, and it is possible other countries may adopt similar legislation in the future. For example, in August 2015, French legislation known as the "Macron Law" became effective. Among other things, the Macron Law makes price parity agreements illegal, including the narrow price parity agreements agreed to by the French NCA in April 2015. Legislation prohibiting narrow price parity agreements became effective in Austria on December 31, 2016 and in Italy on August 29, 2017. A motion calling on the Swiss government to introduce legislation prohibiting the narrow price parity clause was approved by the Swiss Parliament on September 18, 2017. In July 2017, a Belgian government minister announced plans to put forward a similar proposal before the Belgian Parliament. It is not yet clear how the Macron Law, the Austrian or Italian legislation or the proposed Swiss or Belgian legislation may affect the Company's business in the long term.

Competition-related investigations, legislation or issues could also give rise to private litigation. For example, Booking.com is involved in private litigation in Sweden related to its narrow price parity provisions. We are unable to predict how this litigation will be resolved, or whether it will impact Booking.com's business in Sweden.

Litigation Related to Travel Transaction Taxes

The Company and certain third-party OTCs are currently involved in approximately twenty lawsuits, including certified and putative class actions, brought by or against U.S. states, cities and counties over issues involving the payment of travel transaction taxes (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.). Generally, the complaints allege, among other things, that the OTCs violated each jurisdiction's respective relevant travel transaction tax ordinance with respect to the charge and remittance of amounts to cover taxes under each law. The Company believes that the laws at issue generally do not apply to the services it provides, namely the facilitation of travel reservations, and, therefore, that it does not owe the taxes that are claimed to be owed. However, the Company has been involved in this type of litigation for many years, and state and local jurisdictions where these issues have not been resolved could assert that the Company is subject to travel transaction taxes and could seek to collect such taxes, retroactively and/or prospectively. From time to time, the Company has found it expedient to settle claims pending in these matters without conceding that the claims at issue are meritorious or that the claimed taxes are in fact due to be paid. The Company may also settle current or future travel transaction tax claims.

On August 5, 2016, the tax appeal court of the State of Hawaii ruled that online travel companies, including the Company, owe General Excise Tax (GET) on the gross amounts collected from consumers on rental car reservations. The tax appeal court rejected the online travel companies' arguments that GET applies only to amounts retained by online travel companies and does not include amounts paid to rental car company suppliers. The online travel companies argued that GET

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should not apply to gross amounts charged to consumers for rental car reservations pursuant to the 2015 decision of the Hawaii Supreme Court in Travelocity.com, L.P., et al. v. Director of Taxation that GET applies to amounts retained by online travel companies for hotel reservations and not for gross amounts charged to consumers. The tax appeal court declined to follow that precedent and entered judgment on April 25, 2017. Both the OTCs and the Hawaiian Director of Taxation appealed the decision, with the Director seeking GET on the full amount charged to consumers in all car rental transactions (including package transactions), and the OTCs arguing that GET applies only to the amounts they retain in all car rental transactions. In order to appeal the decision, the Company paid the judgment of $13.1 million in May 2017, which was recorded in "Other assets" in the Unaudited Consolidated Balance Sheet at September 30, 2017.

Litigation is subject to uncertainty and there could be adverse developments in these pending or future cases and proceedings. An unfavorable outcome or settlement of pending litigation may encourage the commencement of additional litigation, audit proceedings or other regulatory inquiries and also could result in substantial liabilities for past and/or future bookings, including, among other things, interest, penalties, punitive damages and/or attorneys’ fees and costs. An adverse outcome in one or more of these unresolved proceedings could have an adverse effect on the Company's results of operations or cash flows in any given operating period. However, the Company believes that even if it were to suffer adverse determinations in the near term in more of the pending proceedings than currently anticipated, given results to date it would not have a material impact on its liquidity or financial condition.

As a result of the travel transaction tax litigation generally and other attempts by U.S. jurisdictions to levy similar taxes, the Company has established an accrual (including estimated interest and penalties) for the potential resolution of issues related to travel transaction taxes in the amount of approximately $24 million and $27 million at September 30, 2017 and December 31, 2016, respectively. The Company's legal expenses for these matters are expensed as incurred and are not reflected in the amount accrued. The actual loss may be less or greater, potentially significantly, than the liability recorded. An estimate of a reasonably possible loss or range of loss in excess of the amount accrued cannot be reasonably made.

Patent Infringement

On February 9, 2015, International Business Machines Corporation ("IBM") filed a complaint in the U.S. District Court for the District of Delaware against The Priceline Group Inc. and its subsidiaries KAYAK Software Corporation, OpenTable, Inc. and priceline.com LLC (the "Subject Companies"). In the complaint, IBM alleges that the Subject Companies have infringed four IBM patents (the '967, '849, '601 and '346 patents) that IBM claims relate to the presentation of applications and advertising in an interactive service, preserving state information in online transactions and single sign-on processes in a computing environment and seeks unspecified damages (including a request that the amount of compensatory damages be trebled), injunctive relief and costs and reasonable attorneys’ fees. The Subject Companies believe the claims to be without merit and are contesting them. A mediation in the case was held on May 23, 2017 before the Magistrate Judge. Concurrently with the litigation, the Subject Companies filed two Inter Partes Review ("IPR") petitions and four Covered Business Method ("CBM") petitions for the patents-in-suit with the U.S. Patent and Trademark Office (the "PTAB"). The PTAB denied a full review of one of the IPR petitions and granted a full review of the other IPR petition, and denied a full review of the four CBM petitions. On August 7, 2017, the PTAB issued its final decisions in the IPR proceedings related to the '346 patent and found that certain claims were unpatentable and invalid. IBM has appealed this decision. There are currently two asserted claims arising under the '346 patent that were not the subject of the IPR proceedings and thus remain in the case before the district court. Expert discovery has concluded, and on September 18, 2017, the District Court ruled on the parties' cross-motions for summary judgment. The Court held that the Subject Companies did not infringe one of the patents, the '849 patent, as a matter of law. IBM has moved for reconsideration. The '967, '601 and '346 patents remain in the case, which is scheduled to be tried in the District Court in January 2018. An estimate of a reasonably possible loss or range of loss cannot be made.

French Tax Matter

French tax authorities conducted an audit of Booking.com of the years 2003 through 2012. They are asserting that Booking.com has a permanent establishment in France and are seeking to recover what they claim are unpaid income taxes and value-added taxes. In December 2015, the French tax authorities issued Booking.com assessments related to those tax years for approximately 356 million Euros, the majority of which would represent penalties and interest. The Company believes that Booking.com has been, and continues to be, in compliance with French tax law, and the Company intends to contest the assessments. The Company's objection to the assessments was denied by the French tax authorities. If the Company is unable to resolve the matter with the French authorities, it would expect to challenge the assessments in the French courts. In order to contest the assessments in court, the Company may be required to pay, upfront, the full amount or a significant part of any such assessments, though such payment would not constitute an admission by the Company that it owes the taxes. Alternatively, any resolution or settlement of the matter with the French authorities may also require payment as part of such resolution or

30

settlement. French authorities have begun a similar audit of the tax years 2013 through 2015, which could result in additional assessments.

Turkish Matter

From time to time the Company has been subject to legal proceedings and claims regarding whether it is subject to local registration requirements, such as requirements to register as a travel